Headed Into Earnings, Nike Stock Is Trading Lower Than It Was a Decade Ago. But Is the Turnaround Finally Working?

At about $45 as of this writing, Nike (NYSE: NKE) stock trades 16% below where it did a decade ago. And shares are 44% below their 52-week high of about $80, reached last August.

In short, it's been a tough run for Nike investors. But is that about to change?

Nike reports fiscal fourth-quarter results (the period ended May 31) on June 30. It will be another test of the turnaround CEO Elliott Hill has led since returning in late 2024, a plan management calls its "Win Now" actions. The question hanging over that report is whether the beaten-down price reflects a business that is finally turning or one that is simply stuck.

Image source: Getty Images.

North America is where the comeback shows

Nike's largest market is the clearest sign the plan is working. North America revenue rose 3% to about $5 billion in the fiscal third quarter (the period ended Feb. 28, 2026), led by an 11% jump in wholesale as Nike won back shelf space with retail partners. Management said sell-through grew across every channel in February for the first time in two years, with discounting easing and the digital business strengthening as the quarter went on.

"North America is leading our comeback and is well positioned to sustain the momentum as we move forward," chief financial officer Matthew Friend said on the company's fiscal third-quarter earnings call.

If that February turn holds into the fiscal fourth quarter, even as the region laps last year's heavy clearance sales, it would be real evidence Nike can grow its biggest market again.

But what about weakness in Greater China?

Greater China is the other side of the story. Revenue there fell 7% to about $1.6 billion in the fiscal third quarter, and management guided for a roughly 20% drop in the fiscal fourth quarter.

That decline, however, is largely self-inflicted. Nike is deliberately shipping less product to clear out aged inventory and curb the discounting that cheapened the brand there.

As China sales shrank, the region's operating profit rose 11%, and inventory fell by more than 20% in units -- the result of reducing near-term sell-in and pulling key styles off discount instead of flooding stores with inventory.

But there are signs of progress. Nike expanded a revamped store concept to 100 locations, including a flagship in Shanghai, and said full-price selling improved.

The number to watch on June 30 isn't the 20% revenue drop itself. It is whether sell-through and full-price demand keep firming under that reduced supply.

Checking in on gross margin

Nike's gross margin slipped to 40.2% in the fiscal third quarter, down from about 41.5% a year earlier, dragged down mostly by higher U.S. tariffs that cost roughly 3 percentage points of margin on their own. Clearing unsold classic-sneaker inventory out of the market pulled about 5 points off reported revenue on top of that.

With that said, management notably guided to a much smaller margin decline in fiscal Q4 and said margins should start expanding again in the second quarter of fiscal 2027, aided by easing tariff pressure and inventory clean-up costs rolling off.

But the stock's price decline hasn't necessarily created the bargain you might imagine. Nike trades around $45, close to where it sat a decade ago, yet its price-to-earnings ratio is still about 30. This is because earnings have fallen about as fast as the stock. Indeed, net income dropped 35% in fiscal Q3.

The stock's valuation, therefore, only works if profits recover, and profits recover only if the turnaround does.

Management expects to complete its Win Now actions by the end of the calendar year and plans to lay out longer-term targets at an investor day this fall.

It has also been candid about the pace.

"This is complex work, and parts of it are taking longer than I'd like," Hill explained during its fiscal third-quarter earnings call.

I think Nike is a more investable company than it was a year ago, thanks to the stock's sharp decline this year. And a 24-year run of annual dividend increases, along with a 3.6% dividend yield as of this writing, pays shareholders to wait.

Still, I'd want the fiscal fourth-quarter numbers to confirm China is finding a floor and margins are bending back before treating this price as a real opportunity rather than a value trap. The stock is cheap for clear reasons. Whether those reasons are starting to fade will hopefully be revealed on June 30.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nike. The Motley Fool has a disclosure policy.